There’s No Slowing Down for Human Resources Outsourcing

By Staff Report

Jul. 26, 2004

The worldwide market for outsourcing human resources will grow 21 percent annually, reaching $7 billion by 2008, according to market research firm NelsonHall. While Europe and other non-U.S. regions will grow at a faster rate than the United States, most of the outsourcing money will still be spent in North America in 2008.

Partial outsourcing initiatives–such as payroll outsourcing or benefits outsourcing–will grow at a rate of approximately 8 to 11 percent.

Other findings from the study:

  • Organizations outsourcing multiple human resources processes expect to save between 20 and 40 percent, but are as focused on better results and better metrics as they are on saving money.

  • The manufacturing and financial services industries will continue to be industries ripe for outsourcing. Retail and government may be next in line.

  • Exult/Hewitt leads the North American market for full-scale human resources outsourcing (not partial outsourcing, where ADP has been a long-time leader). Accenture HR Services and ACS are also major players.

The human resources outsourcing market is experiencing “acquisition fever,” with sixteen major acquisitions between April 2003 and April 2004, and it’s not likely to let up.

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